Herbalife (HLF) is expected to grow its earnings per share at 13.5% for the next five years. This Zacks Rank #2 stock also pays a decent dividend.
Company Description
Herbalife Ltd. is a global network marketing company that sells weight-management, nutrition and personal care products. Its products are sold in 72 countries through a network of approximately 1.9 million independent distributors.
Fourth-Quarter Results
Net sales increased 23.0% to $630.9 million. The company reported earnings per share of $0.91, topping the Zacks Consensus Estimate by $0.07.
The company also provided its guidance for the first quarter and fiscal year 2010.
For the first quarter, Herbalife expects EPS of $0.77-$0.80 and net sales growth of 12.5% to 13.5%.
For fiscal 2010, the company now expects to earn between $3.58 and $3.70 per share with net sales climbing 8.5% to 9.5%. Its previous guidance called for EPS of $3.50-$3.65 for fiscal 2010.
Rewarding Shareholders
Herbalife has a dividend yield of 1.9%.
The company will pay out a regular quarterly dividend of 20 cents per share on March 16.
Earnings Estimates
The company’s first-quarter guidance was slightly below the Zacks Consensus Estimate of $0.86, and the Zacks Consensus Estimate fell 5 cents after the company’s 4Q report.
However, analysts maintained their EPS estimates for 2Q and fiscal 2010. It appears that the analysts covering the company believe that Herbalife management is being conservative with its outlook for 2010.
That very well could be the case. We note that Herbalife has beaten the Zacks Consensus Estimate by an average of 11.2% for the last five quarters.
Fundamentals
The company’s return on equity (ROE) of 64.8% is well ahead of the industry average of 12.8%. Herbalife’s net profit margin is 8.8%, easily above the industry average of 3.2%.
Herbalife also has leaner balance sheet. Its debt/equity ratio is a minuscule 0.66 versus the industry average of 16.8%.
